Proceedings of the Subcommittee on
Communications
Issue 12 - Evidence
OTTAWA, Thursday, February 18, 1999
The Subcommittee on Communications of the Standing Senate Committee on Transport and Communications met this day at 10:30 a.m. to study Canada's international competitive position in communications generally, including a review of the economic, social and cultural importance of communications for Canada.
Senator Marie-P. Poulin (Chairman) in the Chair.
[Translation]
The Chairman: Hello, Mr. Thiec. Seeing you, I am reminded of the excellent luncheon that we had in Brussels and of the fact that on that occasion, the subcommittee, which is studying Canada's international competitive position in communications, heard your comments and your replies to our questions concerning what you, as CEO of Eurocinéma, felt about the future.
I would like to introduce my colleagues, Senator Lise Bacon, and Senator Spivak from Manitoba, who will be joining our group in a few minutes. We will invite you to talk about the subject with which you are familiar, after which we will discuss the matter.
Mr. Yvon Thiec, General Delegate, Eurocinéma: Madam Chairman, thank you for this opportunity to again talk to you about the development of technologies and national policy responses to it. This is essentially the subject of interest to you. I see again that you are slightly ahead in Canada in this area. I hope that it will encourage the other countries and the EU to work much more intensively on these matters.
I would first like to say who I am. Eurocinéma is a professional institute consisting of trade union associations, film producers, film authors and television producers. We have been here for seven years. It is my job to keep track of all European issues related to the audiovisual field. The first subject I focussed on was cultural exception at the end of the GATT negotiations in 1993-94. I keep track of all the regulatory aspects concerning the audiovisual field in Europe and questions of competition which are becoming an increasingly important matter of European jurisdiction, all international trade issues, and in particular all of the WTO negotiations that are to resume.
I was greatly involved last year in matters of convergence between audiovisual telecommunications and data processing, because the Commission presented a green paper on the matter, which was followed by a number of hearings, in which you participated. At the time we had to reflect considerably in order to answer all the questions related to the convergence of communication modes.
You sent me a document clearly synthesizing your topic, cultures and technologies, the global challenges presented by them and the responses made in national policies. I felt like commenting on each of these words, namely culture, technology, global challenges and national policy. We could spend a good deal of time on this, because each of the words is heavily weighted. I am going to look at each of them, quite briefly, so that we have time to discuss and answer your questions.
Concerning culture, I have two thoughts. First, I would say culture and state sovereignty. Concerning the 21st century, I feel that culture will be the last manifestation of State sovereignty. Just what is state sovereignty? It means having a territory, a currency, a defence system, security, laws and the power to make one's own laws. All these components of sovereignty will one day be changed or done away with.
Let us look at the European example. What is happening there? The countries will lose their currency because Europe is getting a common currency. Within 50 years, Europe will have a common defence system. France, Germany and Britain will lose their armies. The law is disappearing at the national level, because increasingly, laws are propagated through the medium of European integration. Conventional State sovereignty is going by the wayside. The strong remaining element in sovereignty is the use of a language, a way of thinking and the presence of a culture. It will remain as a strong element in the national conscience. It is perhaps the primary element on which we should focus.
What is happening right now between the culture and the electronic media? I am not talking about culture as it pertains to the living arts, the plastic arts, books and heritage, which are essential parts of the culture. My experience inclines me to talk about the electronic media. There are two primary models in Europe. There is the model of the large member states, and in these member states I do not feel that the electronic media are squelching ways in which national cultures are expressed, in music or even in audiovisual - on the contrary, there are now more national works in music than there were before. France, Italy and the UK all have their own singers and their music is selling.
This was not the case a few years ago, when international and American music was predominant among audiences and even in recorded music sales. A resurgence of interest is taking place in regard to national music. The same thing is happening in audiovisual, where in five large EU member States, including France, Italy, Germany and the UK, national fiction and fiction programs have the highest audience ratings. In other words, the public really needs to find national programs. There is a kind of correspondence.
I say this because I am not sure that international networks necessarily lead to the fragmenting of national cultures. Of course, the right conditions must exist. Clearly, if audiovisual fiction is getting wide audiences in these major countries, it is because they have true structural policies for artistic creation.
In the U.K., the BBC has a very high subscription rate. Germany has a high rate for public television networks, and France has regulations, and therefore fees plus broadcasting quotas. All this national content exists, but is not spontaneous, it depends on the legislator's will to create the right environment for it.
On the other hand, in the lesser countries of the EU, those with less population, it is really difficult to have a national cultural content, simply because they do not have the population or the resources. This is especially true in the Scandinavian countries, which must depend on English programs, because while they are spending resources on building national programs, they do not have the population - Sweden's population is eight million - thus they must resort to the international market. They are now complaining considerably about the fact that their children have too much access to American works and are starting to react as Anglo-Americans rather than Swedes.
The situation in Europe varies with the size of the country. The larger countries are defending their identities, and the technology variable might continue to be unimportant. There is a model that is worth looking at, if one has a large population. I believe that it creates quite different critical masses. These are the two ideas insofar as linguistic and cultural pluralism in the media are concerned.
Let me now look at the problem in communication technology. There has been much discussion in recent times in Europe about the convergence of technologies, audiovisual telecommunications and computer-operated satellite cable. All these sectors which used to be separate - the telephone, electronic data processing and television - are now coming together. For example, in Europe there is a new phenomenon, namely the advent of telecommunications at three decision-making levels in audiovisual. At the financial level, the Télécom groups are now involved in the financial structures of broadcasting. France, for example, now has a digital bouquet, which is actually a digital platform, or a number of thematic channels making up a series of programs. France has two of these. One of them is TPS, and the other, Canal Plus. TPS, or television by satellite, is made up of public and commercial stations and France Télécom finances 20 per cent of it.
So already you have a group from Telecom involved in funding audiovisual. The same thing is happening in Italy. Recently there was a good deal of talk about Murdoch's arrival on the Italian audiovisual scene. It was attempting to enter into partnership with Italian telecoms specializing in audiovisual development.
That is a new phenomenon which of course raises a number of questions, for example where competition is concerned. Telecoms coming in with a good deal of money - this sector has a considerable cash margin, and is far better funded than the television sectors - can create competition problems. For example, money is taken from telephone subscription fees to finance audiovisual and compete with other audiovisual operators who do not have the same margins.
Telecoms are found at another level, and are audiovisual operators and owners; they develop activities in cable network. They are found at a third level associated with the growing distinction between methods of technology transmission, which now include hertzian television, cable, satellite, informatics and telephone.
Thus, because they have the financial resources and because they need to develop, the telecom groups will be increasingly involved in audiovisual. This will pose a problem for legislators, who will have to provide laws on competition and content regulation, in order to keep these new stakeholders in line.
There is also convergence at the technical level. To say otherwise would be to deny the truth. Does that mean the end of the world? Yes, if you feel that nothing can be done and the public authorities - especially the legislators - cannot do anything to create an environment friendly to consumers, nor further the question of interest to us, namely the expression of pluralism and linguistic diversity.
So if you feel that nothing can be done because these technologies are out of control, yes, it is the end of the world. But in my opinion, the methods of transmission arising from convergence are not beyond legislative control.
Before getting into what might be called the philosophy of regulating these technologies and convergence, I would like to backtrack and explain where Europe stands from the viewpoint of the audiovisual communication market. The great revolution in Europe has been the end of public television public service monopolies in the 1980s and the development of commercial channels in practically all countries.
This model already existed in the UK, because commercial stations had existed since the 1950s. But in all the other countries, television was a monopoly until the 1980s, actually a public service.
The public services appeared in the 1980s. More or less at the same time, governments decided to end these monopolies, resulting in a duopoly, which had two effects. First of all there was competition, for example for the independent television producers. They had two markets: public television, in most countries, and commercial television. Two types of companies with which they could make contracts to develop programming.
At the present time, I feel that this opening up of competition for commercial channels has consolidated the hertzian channel market in Europe. I think that for many years we are going to find ourselves in a landscape dominated by national hertzian channels. For the time being, there is very little erosion in audiences and market shares, in commercial terms.
For all that, there is a new phenomenon gathering speed and these are those digital platforms, the digital clusters, in other words the assembly of many thematic television services within the same cluster and the money pays for the whole cluster, for all of the programs being offered.
In France, there are two clusters that have been set up and are competing rather fiercely to try and draw the most subscribers. In England, you have a digital cluster called BskyB.
The big European countries have problems setting up digital clusters for all kinds of reasons, for example agreements between possible partners. In Germany, for example, the commission didn't authorize the creation of a company where you had Deutsche Telecom, Bertelsmann-Kirch and public television.
So it is all of the partners of the audiovisual telecommunications sector that got together to develop a digital cluster, and the Commission as well as the community decided that was creating a monopolistic situation which is incompatible with the vision of an open market.
This new media, actually digital clusters, is setting itself up in Europe and is still very fragile. It is not quite developed yet but it is the second kind of media that is going to graft onto these hertzian media.
Globally, the media are not moving at speed. If you take the American example, the three national historic networks still draw in 50 per cent of the audience despite the installation of cable networks in the rest of the U.S. for quite a while now, and thus competition between those cable networks, that are often regional or local, and the big national networks.
Despite that, for distribution, it is important to have national networks; you know that Fox has set up another national network. The idea of national hertzian networks that include the whole national footprint, in my idea, is not a disappearing model.
In the U.S., during the last three years, they have been announcing a satellite television service: DirectTV, that has 9 million subscribers. It is called a success because there are 9 million subscribers, but that is 9 million subscribers in a market that has about 90 million homes. In reality, it is not a considerable number and you can even see that the American consumer's propensity to plug into a new kind of source, in this case, satellite TV offering a broader range of programs, and the progression of this kind of market is very slow.
What I mean is that there is an inconsistency between the new technology that actually does exist, where you can plug in all kinds of things like a computer, on a satellite and get return messages through cable, et cetera.
There is a kind of inconsistency where the market is concerned, in Europe, in any case. I cannot speak for what is happening here, my concern is rather to express what is happening in my area.
If things are evolving, in Europe, in any case, they will evolve sufficiently slowly to give us time to react and get some sort of predictability on what will have to be done, including in terms of regulations.
I tend to think that if one day there are ever works going over the Internet, it will doubtless be a residual market, at first, that will be added on to the traditional audiovisual market. And you will have to continue to control the contents of those networks through traditional regulations.
Broadly speaking, the regulations needed for those new Internet networks would, for example, deal with financial compensation. We know very well that in most countries, we are in a delicate position when confronting the American content industry. We are not in a situation of sufficiently strong competition conditions to confront their capacity to finance content.
How is this content financed? You can finance it through support funds, through taxation of some kinds of networks. For example, in some European countries theatre networks are taxed, there is a kind of tax on admission. This tax goes to a support fund targeting content creation for the theatre.
In France, they do the same thing for TV because the networks are subject to an obligation to fund production. The content produced with these funds is then broadcast over the networks.
So it is easy to imagine that if Internet were to become a relatively major system of product communication, then you would need a kind of compensation that would be a sort of network tax and compensation for a fund that would be used to finance the product to be broadcast over the network.
That product, of course, could be an audiovisual product, but it could also be a sound product only and presently there is more sound product over the network and more pirating of the sound product. So that is more the kind of product that is found more often on the Internet network these days, but one could imagine that there could be a fund with a view to facilitating, encouraging and stimulating the creation of national products that could be either sound, multimedia or audiovisual.
I do not see how the lawmaker could not have the legal means available to do so. I get the impression that, in time, we will make this Internet network secure. In any case, either we do not make it secure and no one will be interested in broadcasting any product using that network or we will make it secure and know exactly what is going on. At that point, as soon as it is secure and we know what the fruits of the product may be, then we will know just about what kind of sales and resources it can generate and you could then very well imagine some form of taxation.
The two challenges for the national lawmaker is to know whether they feel like creating this kind of network compensation and the necessity of creating resources to generate products for the future of the network. As the Internet network is global, one of the challenges is to do something with a view to some kind of network taxation which would involve an international agreement, a kind of agreement between the states that are the leaders in that area.
Right now, you have a movement by multinationals that want to invest in the Internet. Basically, the Internet is still a libertarian network and it is relatively interesting and it allows people from everywhere in the world to get together and exchange information on things they have in common.
For example, I have a testimonial from someone whose child has a very rare disease that is not treated in Europe because, of course, public health does not put much into treating very rare diseases. That person found an Internet site where all the parents of children with that disease got together to create the information necessary to treat that disease. So we still have sympathetic and voluntary use of the Internet network on a libertarian basis.
It is clear that the path they are trying to go down now is to go towards an Internet that would become a network providing commercial products or a commercial vector. Behind that commercial vector, many questions are already being raised, in other words, is it small business that will profit by it, which would be an interesting thing, or huge multinationals that will take over the network to sell their products?
In the area of music, for example, I can already see an emerging conflict in the area of the sound product, between the authors who say they want to use the network to sell their music directly without going through producers, and the huge music multinationals that do not want to hear anything about that and who, of course, want the authors to make music while they, the huge studios of the sound industry, remain the element the product goes through. In other words, they remain the economic agents.
As the network is global, you would need some kind of international agreement on the conditions to set up financial compensation to stimulate the content. Public authorities will certainly have to curb the pretenses of a certain number of multinationals who are saying, "Yes, you do not have the right to regulate the network, it is a private space. All we want to do is self-regulation. Those multinational corporations figure they can take over the network and dictate whatever regulations will be implemented over that network.
There is a hijacking of the commonweal, because the privilege of the commonweal is to avail itself of monopolies, the right to legislate, the right to regulate, the right to make law. I find that this phenomenon of self-regulation leads necessitates real reflection from the legislator. It is quite new. I have never seen that, neither in Roman history, nor in Greek history. The role of the legislator has never been questioned as much as by this concept which wants to attract sympathy, that says that we want to self-regulate because it is less ponderous than anything that is done by those parliaments and those policies.
I should conclude. There are new technological phenomena that, in my opinion, can be controlled. What I find interesting is the new idea that says that this network is not controllable and that somewhere, it is not necessary that it be controlled. So this shout for freedom concerns me because it is not coming from the citizens anymore but from big business. So there is a rather worrying hijacking that needs to be reflected upon.
The Chairman: Mr. Thiec, your presentation was extremely interesting and we have a lot of questions for you. You say that in Europe you have already noticed that technology and the potential clientele is out of phase. How do you explain this?
Mr. Thiec: I think the public is conservative. There is the interesting example of a French radio network, Radio France Internationale or Radio France Outre-mer. This network has gone from long waves to FM. All you have to do is push a little button and you get far better sound quality. The CEO of Radio France Outre-mer told us that no matter how much you explain to people that by changing the frequency on their radios the sound will be better, they have noticed that the audience has trouble changing.
In France, we all know that the first public TV network, TF1, has become commercial. We know that 10 per cent to 15 per cent of the audience watch TF1 because it is the first network and they have always been pushing that same button. If you want technological change that really worked, you have the compact disc. In two years you went from vinyl record to compact discs. It is the only example of very rapid adaptation from one kind of media to another. I say that it is not relevant because it is a matter of comfort because CDs are smaller. It is not even an electronic media where you have to push buttons and change the way you used to work.
In France, we ordered a study by one of our unions on the evolution of the ranking of official television networks in the audiovisual arena. We were interested in that because the regulatory background is tied very closely to the ranking of television networks. Basically, the simulations they ran led to the conclusion that already, until 2005, there would be no change in the creation of the audiovisual outlook. It would seem that the scenario is not very encouraging as far as evolution goes.
Senator Bacon: How much do you think European cinema production will be affected by present technological developments and more particularly by the future marriage of Internet and television? In your opinion, will the European cinema industry be able to face those challenges?
Mr. Thiec: That is a question I have had to think about a lot these days for a simple reason. In Brussels, they are legislating copyright over digital networks to protect works as soon as they start circulating over these digital networks. There has been a lot of fighting going on. In reality, it is a matter of extending copyright as it exists to the new network. We have had terrible fighting here. The Télécom groups, public libraries, the handicapped - you probably have this problem in Canada - are all in favour of no copyright protection for these new networks. There was a huge coalition of all those different interests that are all legitimate. The authors, the creators wishing for recognition of their copyright over the network, the same as they have for all other modes, were slightly vulnerable. The European Parliament voted a text protecting copyright thanks to parliamentarians who did fantastic work and who, in my opinion, understood the stakes very well.
So I have been asking myself the very same thing. Network security in favour of copyright for authors, interpreters and producers is fine, but, still, that network cannot slip from our grasp and become the instrument of a strictly American hegemony. I am not able to answer today. Will there be a real market? Will the network ever become a vector, what you actually call "casting," in which case you are talking about convergence between television and the computer? Will that kind of application develop? As an application for the consumer, it will take time. Will we have our place there? Will we be able to seize this opportunity? I have many questions and I am concerned. The situation you have in Europe today regarding film production is one of national film production. Everyone stays home. You have the national film production whose performance is not too bad considering the means are weak. I have England in mind where they put very little money into production and have very few public incentives to production. The English manage to capture 20 per cent of their audience in the theatres. I find that rather good. In France, it is between 30 per cent and 35 per cent. When you fall below the 30 per cent mark, people are very worried. In Italy it is about 20 per cent. Everyone has his own share of the national market. There is no catalogue of European productions circulating in Europe. That is the first weakness. Of course, faced with a global network placing a premium on those who have the financial means to invest, to provide the security and control it, we are out of the starting gate with a real handicap. I rather admire how you have thought of all those questions. I would like them to be coming from our public authorities in Brussels, but unfortunately, that is not yet the case. We have a rather naive and spontaneous view of the whole thing, a bit like Jean-Jacques Rousseau's Good Savage. They say it will be very simple, that those who do good work and who show courage will get onto this network; but you do not have to be too concerned. It is a scary view.
Senator Bacon: Confronting free trade pressures and the convergence phenomenon that will probably upset the audiovisual world, can governments still elaborate effective strategies to encourage movie production?
Mr. Thiec: First of all, I think we must consider two levels. They will be reopening international trade negotiations in the context of the WTO next year. We have to get out of the rut we are in at the WTO. The WTO treats audiovisual as a service. Services are treated like goods in the 1948 GATT treaty that targeted goods and the idea, at the time, was to create tariff liberalism on industrial goods which, in my opinion, was a good thing. Through some kind of summersault, salts, we are a service and after that services are treated as goods. We are getting into a rut that will not make life any easier for us because, at the end of that rut, the idea is to arrive at total liberalization of access to the services sector in all countries and that can only profit the most powerful providers of these services in those markets. You know very well who they are. Very few countries have made a commitment to liberalize audiovisual services because most English-speaking countries do not want to have to submit to this out-and-out liberalization.
That will be the first battle. There will doubtless be an electronic commerce table opening up at the WTO. For the time being, there are no substantive texts on what electronic commerce negotiations are in the context of the WTO. I think there will be a table on that theme. What will be asked for at that table? It will be absolute liberalization, in other words member States of the WTO - almost the whole wide world - giving up the idea of keeping any kind of independence with a view to regulating, organizing or stimulating production on that kind of network.
Technically, I do not see why we should not tax the network to create support funds that would help generate the creation and production of new content that could be sent over that network. I think the first obstacle would be to accept electronic commerce negotiation and accept to commit to total, unconditional liberalization of that kind of practice. From that point on, your hands are tied. You would not be able to use the weapon of taxation that allows you to recreate a balance especially in such an unequal sector as those industries.
Senator Bacon: Would it be desirable for the member countries' policies to aid movie production policies to be replaced by a European strategy? Would it be easier?
Mr. Thiec: In Europe, you would need a first link in the chain. In fact, you should not work on the funding based on the present scheme. There is a difference in the funding. Some countries fund their industry better than others. It is hard for me to force all States to put the same money into movie audiovisual content. On the other hand, what the vocation of a European intervention might be, because it does go hand in hand with the idea of setting up a domestic European market, is the one of facilitating the circulation of productions. To make it possible, for example, for the French to see more German films on French TV and for the Germans to see more Italian films. You would have a double objective. That would give you both a better amortization of those productions, because they would be seen more and thus they would be making more money and you would also have pacification in view. The old European countries have always been hostile toward one another. The great Anglo-German-American philosopher, George Steiner, said that the history of Europe was the history of a civil war. You had people coming from the same cradle warring up to about 30 years ago. They put an end to all that so people could visit more, because they wanted the European elite to see one another and travel. I have often been to Berlin, Strasburg, Paris and Brussels and I have met a lot of people in the same position as me. Our populations mingle a lot less and use TV as the majority vector. If you do not use that vector to see more pictures from surrounding countries, I do not see how you will make people improve their awareness of coexistence between those countries.
I do not want us all to become "volapük" citizens. I would like a Frenchman to remain a Frenchman, very proud of himself, but still with respect and understanding for what an Italian or a German or anyone else is. I am not talking about responsible people with some culture, but about the average population.
There would be an economic objective, one of pluralism working on a pluralistic basis. That thing should be undertaken. We are doing it, we have started and we have a program whose goal is to facilitate distribution of non-national films in European movie houses. They would be shown in countries that are not their countries of origin. We have gotten together with the public and commercial networks to think about extending this program with a view to providing some kind of incentive in the shape of subsidies to reward them as soon as they show movies from other countries. This incentive would serve for the purchase of other movies, not to increase their profits. We are trying to move ahead step by step on that. We are still very timid.
Senator Maheu: You are starting to get into the subject I wanted to get at. In the Free Trade Agreement with the U.S.A., Canada enjoys a cultural exception. Europe enjoys the same exception with the GATT, doesn't it?
Mr. Thiec: Yes.
Senator Maheu: Some have questions about the applicability of those exceptions. What is the real experience in Europe? You may very well say that you will start watching movies from countries other than your own, but with the protection of one's culture, how do you see that in Europe?
Mr. Thiec: First, with the GATT, the cultural exception we have in the agreement is, in fact, an absence of commitment to liberalization. Somewhere among the different concepts whose objective is to liberalize access to the most favoured nation national treatment market, we didn't make any commitment. The audiovisual sector is formally included in the GATT. The mechanisms to accelerate and increase liberalization are not applicable at this point. This technique is satisfying enough because although the audiovisual sector is included in the GATT agreements, no claims have been made, no panels asked for, no explanations requested on how our regulatory systems or support systems work.
Generally speaking, the way things have been done during the last four years seems satisfactory, in my opinion. During future negotiations, nothing having to do with the problem of content should be put on the Télécom table. Once again, in the WTO Télécom negotiations, Europe requested that there be a proper distinction between the transportation aspect, which means the communication vector of the transported contents. The negotiations to liberalize everything having to do with telecommunication infrastructure must remain neutral as regards the contents.
The contents are totally taken care of in the audiovisual sector for which no liberalization commitment has been made under the GATT. Over time, even if there is already some audio content on Internet, you will have to be careful with audiovisual content. It is not as clear in that case. You will have to see to it that content problems are not dealt with at the electronics table but at the audiovisual services table and no commitment towards the liberalization of those services should be made even if they are transported using other informatics techniques. As you have not yet committed to liberalize, you are free to continue examining forms of intervention.
The issue is to not get into this global package of electronics. In Europe, we have already thought about that at length. The Commission wants to settle all aspects of electronic commerce at a single table internal to the union, an electronic commerce table. We have separated intellectual property from that. When I say we, that is both the professionals and the politicians.
More specifically, the Belgian Parliament wishes that anything having to do with copyright will not be subject to a horizontal electronic commerce text but that it will be spelled out in specific texts and remain an intellectual property problem. So we have set up a kind of regulatory functional model. One can imagine that we will keep this audiovisual table and apply it without distinction to all audiovisual services.
You see there is a movie on the Internet. That is an audiovisual service. At the WTO table you decide not to make a commitment to liberalization. Maybe that is the model we should be looking at.
The Chairman: My first question deals with public radio and television. What role do you see for European public radio and television in this new media environment?
Mr. Thiec: You know the European scene well. That is one of the files I must work on. I have already had to think about this. The Commission on Competition must examine whether public networks in Europe are being abusively funded by the member states or not. In most countries, the public network resources are obtained through fees and publicity revenues.
The commercial networks complain about this kind of competition. They say that some have access to funding whereas they only have access to publicity revenues. A few days ago, with my colleagues from the production sector, I went to see the DG4 level to explain why we consider it necessary to keep this audiovisual framework where you have both commercial and public networks. We had to explain that, basically, the public networks have unquestionable added value compared to the commercial networks. But I was still dealing with competing public servants, people who apply the rules of competition, not people who look for sophisticated arguments. I told them there is pluralism of information that is far better practised at the public level.
In France, they have just started the contaminated blood trial. Actually, it is the first time a high court gets together to judge ministers. I saw how the trial was being treated and the whole, extremely complex and difficult matter that I do not know much about. On the public network, in the evening, before the trial, there was a one-hour program explaining the whole thing on TV news. On the commercial network, they spent a quarter of an hour on it, even though it is an important matter for ordinary people. This trial has very strong implications concerning the credibility of the political class. So it was important to explain things.
So you have pluralism of information as well as pluralism of productions. One of my colleagues was explaining that the commercial networks do not produce the same kind of thing as the public ones. The public networks try to produce programs more in keeping with a certain audience. They are looking more to the educational and cultural aspects while the commercial networks are looking for a market aspect, in other words getting publicity resources.
To my mind, I think that the interaction between the commercial network and the public one creates interesting competition for program producers but it also has a major pluralism impact. I would say that the value goes more to the public networks than the commercial networks, of course. That model deserves to be kept. There is a debate in Europe, and I find it interesting, because it gives us the opportunity to rethink the form of public television, its necessity and the kind of commitment one must have to it.
The Chairman: We have been having the same debate in Canada for some 15 years and it is the whole matter of the commercial revenue pie that is at stake. My next question has to do with private television. In France, some TV networks like Canal Plus play an important role in funding and distributing films. Moreover, classical network television, for example France Télévision, under its terms of reference, must broadcast products. Could you tell us more about the roles the television networks play in promoting movies in Europe?
Mr. Thiec: Canal Plus is a pay TV network. Its goal is to offer both movies and sport to an audience of subscribers who pay to watch movies and sports. When Canal Plus was set up an existing hertzian network was granted them. From day one, Canal Plus was being broadcast all over French territory.
At the time, protests were rather strong and came both from the production side as well as movie house distributors. There was a double arrangement for movie house distribution. For example, Canal Plus could not show movies Saturday nights so that people would not stop going to movie houses. The producers were afraid that Canal Plus would empty out the theatres and that people would not go to movie houses anymore and just stay home watching movies on Canal Plus because it broadcasts recent movies only one year after they have been shown in theatres.
So the compromise that was arrived at was that, first, Canal Plus would appear as a second window for movies after they had been distributed to the theatres to respect chronology. The second compromise was that Canal Plus would fund movies. It shows movies but it also funds them.
At this time, Canal Plus invests one billion French francs in this of which 800 million go to French productions which must be about 25 per cent of the total investment in French movie funding, and 200 million are set aside for producing non-French European productions.
Canal Plus at this point is a big promoter not only of movie funding. It now prefers to develop further in Europe: it is present in France, Spain, Italy, the Netherlands, Belgium and so forth. Practically half of Europe is covered by a national pay TV and movie network where a sort of leader has set himself up in movies.
As for the public networks, they have an obligation to invest in production in national hertzian networks whether they are public or commercial and that is 3 per cent of their total business. They also have an obligation to pre-buy productions. So funding through Canal Plus, plus the public networks, means that television, as a whole, today, funds half of France's cinema.
In reality, there is total dependence of movies on television but it is basically a reflection of the evolution of the situation. Television has become the first movie house. Somewhere it is the first client for movies and, on the other hand, it is also the prime funder of movies.
The French example is interesting because it is an example of easy passage, a very good example of economic mutation. The historical model of the cinema is a market that was based on movie houses. At the end of the 60s, television became the media leader in Europe. So what happened? You saw a decrease in movie house attendance - people stayed home to watch TV.
An absolute counter-example of a bad relationship between cinema and television is to be found in Italy where public television developed first and was followed by commercial television, Mr. Berlusconi's networks. These networks, both public and commercial, were not subject to any investment obligation or any obligation to buy movies and as the lawmakers did not impose this sort of obligation, they did not decide on their own to try to fund movie production or make it more dynamic.
The present model of the Italian movie scene is a total production disaster. You have a few Italian movies, but in real life the movie structures that help create a real economy just are not there anymore. An ex-minister did have legislation passed to impose a legal investment obligation for public networks to the tune of 30 per cent of the global volume of copyright for the public network and 20 per cent of publicity derived revenue for commercial networks. That represented something like 700 or 800 billion lira, the equivalent of 2 to 3 billion French francs - the equivalent of what France invests in movies. That would have created a fund for producing both TV as well as movie house movies.
For the legislation to be implemented, it needed a decree that never seems to have been issued. So the legislation is blocked. If you will, there was a clear reference to the French system which, for the time being, has yet to take effect.
If this funding obligation were in effect, we would see the second pillar of Europe's cinematographic history, the Italian, be reborn. That cinema was always brilliant and formidable during those years where you had a real market in the movie theatres.
At the present time, there is a very strong contrast from country to country. You have France that provides proper funding - that is the characteristic that seems important to me - through revenue raised on the market, in other words, you require a mandatory investment from the networks, but you are skimming off TV revenue to transfer it to production.
In a country like Germany, movies are funded through a pure public accounts subsidy technique, in other words they use public funds to produce movies. The link with the economic stakeholders is broken. As television funds cinema, it also requires a return. It also wants movies that can be value-added elements in programs for consumers.
The Chairman: You have mentioned cultural plurality and information plurality several times. At the beginning of your presentation, you gave a definition of culture. You define it very broadly, not only referring to the great classical productions in all fields, but also to our ways of life. Does your definition of culture include what is called service to the public, or what you find on both TV and on the Internet?
Mr. Thiec: There is a major debate amongst culture mavens. There are those who think that culture is a sort of a totally elitist practice and there are those who have a more anthropological view of culture, as a way of eating, of thinking. You know that in Europe, people do not think the same way. Germans do not think the same way. The English do not think the same way as the French. The latter's way of organization is a bit like a garden, very geometrical. The English view is far more like an English garden and for me, of course, these things are very important. When I am with the Germans or the English, I bear that in mind. I know that they would not be saying things the way I am going to be saying them. I am sometimes almost prepared to not understand them very well because I know that the German is going to lead off with: "You have the earth that is round, and on the earth you have Europe and in Europe you have Germany and in Germany you have Baden-Württemberg and in Baden-Württemberg you have Stuttgart." You start with the general and lead down to the particular. That is important. That is why I think that culture is a rather vast array of ways of expressing oneself. It is a view of culture that is perhaps not very pure as compared to a purist's view for whom it is the major works, the great paintings, the great novels, the great literature. I think that is what makes up the conscience of a population and builds the ties that bind.
You will remember Renan's definition: what is a nation? He said that it is a will to live together. And this will to live together, in my opinion, is expressed through the ways we act out this living together. I like the development of the European model a lot. In France, now, you can find Italian things and eat Italian. In London, where all you had were green peas in the old days, you now have fruits and vegetables and all kinds of things. For all that, we are still not a volapük model. When you are eating Italian, you know you are eating Italian. There is still a very strong identification. This is a strong cultural element, in my book. I do not know if I am answering your question fully, but in reality it is a whole debate on its own.
The Chairman: This is extraordinary; you have more than met my expectations. For a long time I have been wanting to hear about an approach to culture that bears such a stamp of reality, of daily living and even of futuristic views. I have two more brief questions for you.
In your presentation, you spoke about the necessary conditions that have to be in place to favour cultural pluralism and thus its expression through all these new means of communication. Could you elaborate a little on these conditions?
Mr. Thiec: This is an ambitious question. I think that the public powers must not give up. Legislation and the lawmakers have a role to play. Based on experience, who has created the conditions most favourable to pluralism? It is the lawmaker. The lawmaker's intervention can take many forms. It is not necessarily the same, for example, in the case of the freedom of the press of the 19th century or the funding of movie productions through television in the 20th century.
One thing they have in common is the law and it is our lawmakers who created those environments. Where you have a problem, to my mind, is that there is probably a shifting of the legislation, in other words the legislator may be making laws at the national level or maybe he will be making them in a broader environment. For example, it is clear that the WTO is one way of making legislation. So there is a shifting of rules on commerce and national rules for a common space. Maybe we should also be thinking about investing in another space to make laws on these new networks and that is certainly an issue and a challenge for the legislator. But that does not mean the disappearance of the legislator's role, for all that. That must not happen.
The multinationals are expounding very strongly about the need for self-regulation in the new medias and the new networks. What does all that mean? That means the weak will be swallowed up. Legislation ensure balance, balance between the different interests. There are a lot of interests to be preserved on these networks. There is the interest of the consumer, of pluralism, of expression, of contents; there is certainly protection against contents that are racist, pornographic and so on. I do not know how all this can be managed in the absence of legislation and the legislator on these networks. That is the first condition.
The second, as it is expensive to produce content, is that the best way to create content is to set up funds to create products by getting the networks to contribute financially to this. You know that the problem, in Canada as well as in Europe, is that the production structures are fragile and small. So they do not have the critical mass needed to engage in combat with the huge production outfits whether in the area of sound or audiovisual. Somewhere, also, there is a role the public powers can play in helping the weakest by providing funding through a support fund. That is the second element. So the first element is legislation and the second is money.
Behind that, of course, you need your creators, your authors, your producers. And doubtless education also has a role. So three rather ambitious roles, but if you think about it, there is nothing new in that. Our democracies evolve well because they are successful with these missions in education, these missions in funding and these missions that respond to the public's interest in the matter and because they ensure the monopoly of lawmaking, quite simply.
I am going to question everything I see and hear in all the newspapers and from those who say that everything is changing, that things cannot go on like this, that everybody should stay home and just let the whole thing slide. That is what was being said about railways in 1840, but we organized our railway networks rather quickly in the areas of legislation and finance. And maybe it is thanks to that that we very easily set up a public railway service.
The Chairman: If I understand correctly, the first conditions are the roles and responsibilities of our legislators, both nationally as well as internationally; secondly, you have the responsibilities that go with production costs and, third, we must make sure we encourage quality through the training given our creators, our writers, our thinkers and all the professions involved.
Could we have a fourth? Because, finally, one of the greatest difficulties or challenges in Canada is distribution. Even though we may have quality, even though we know the cost of production is high, even though we know that we have the appropriate legislation, we are being buried under the avalanche of American productions that surround us. How can we make sure that, as a fourth condition, promotion and distribution are adequate?
Mr. Thiec: I was saying there is a double model in Europe, the big countries that manage to maintain a presence, both in literature as well as in audiovisual pictures, in the audio area with their national content, and then you have less populated countries who have fewer resources, less critical mass, and complain about the fact.
I witnessed this in Sweden during a meeting with the Nordic Council journalists. I felt that there was already a threat to the written press in those countries because they are small countries with 8 million inhabitants and distinct languages, Danish, Swedish, Norwegian and Finnish. That really astonished me because in the major countries, the written press in going towards concentration. If I forgot the fourth point, it is because I have a bit of a bias as I am from a major country and I would hope that we would just be able to hold the line. The stakes are complicated there too.
I really do not know how we can go about it on the data networks, because it is the public who's going to decide what it wants to see. Once again, this goes through a form of preconditioning.
For example, in the movie industry, the people in France, on average, go to movie theatres twice a year. The movies, the very major movies, whether they are French or American, the "blockbusters" are sold through a kind of preconditioning with massive publicity. I have even seen banners set up in the train stations, in France, and as soon as you get off the train you can see that it is for a big-budget French movie. Two years ago, it so happened this French film was heavily promoted and people went to see it. Right now, there is Astérix that is really successful in France because it was launched with a huge promotion.
The public undergoes strong preconditioning and once again there is a real mystery on those networks: is what is shown on those networks going to go through a preconditioning of the audience and then it will be those who have the means to do that preconditioning and have the means to do the marketing and a lot of money who will have the major share of this potential market to be shown over all those networks? It is a real challenge and a real problem which, in my opinion, hasn't been answered yet.
I understand how much of a concern it can be for you because you are still an extremely specific example but one that could affect other countries. For the time being, your problem is your physical proximity but with this network, the geographic proximity won't count anymore, it will just cross the oceans.
What is interesting, not to end on a negative note, is that it so happens that I have set up a think-tank of academics. We met for three days in November. There were European academics: German, English, Italian, French, Spanish, Belgian and there was one Finn. The theme was: What convergence and for what media? And the Finns said something interesting - while in Europe we are a bit concerned about this problem which could become an Internet development concentration, in other words a concentration working for the strongest - in Finland it is great as the Internet allows people to create relationships between one another because their problem, over there, is that they have small geographic communities lost in a long country that is somewhat corridor-like.
First of all, the Internet is very developed in that northern country and has become an instrument for communication, proximity, relationships. This Finnish academic, while all the Latin types were rather worried about the development of the Internet, seemed to think more along the lines that it was an element for organizing the social fabric.
At the present time, and this is very interesting, there are very different ways of thinking about the network. In Finland, for the time being, this professor is quite happy because the network remains a libertarian network with individuals who use it to do just about they want with it.
If the network loses this relatively citizen-friendly, open aspect and simply becomes a playground for a few very major interests in the area of audiovisual or sound editing, it will of course lose this virtue.
The Chairman: Yesterday, we had the opportunity of meeting a professor from Columbia University. He was telling us, and basically this goes in the same direction as what you have been telling us here today, that fragmentation would not happen only along cultural lines alone, anymore, but mainly along lines of interest. So all those small communities, in all countries, will get together under the umbrellas of common interests like golf or the medical need you told us about earlier.
In conclusion, if you had three pieces of advice to give us as a country, to ensure that our best Canadian products are made more and more available to European populations through the new media, what would these three pieces of advice be?
Mr. Thiec: You are not really that absent from Europe. I am just thinking of Céline Dion, and that is an interesting example. Here is someone speaking English and French and I am sure the fact she is bilingual is a condition of her international success. So she is perfectly bilingual and, at the same time, perfectly adapted to the Anglo-Saxon and French mentalities. There is a great example you could meditate on. Just think, however, that the major French singers are not the leaders anymore.
You are putting a really embarrassing question to me, here. Somewhere, I think that audiovisual, multi-media and information or communication products remain products that are sold and, despite anything else, need to be promoted on the market.
If you were to put this question to a specialist in export or trade, not just audiovisual, but who might be specialized in another area, even automobiles, for example, he might have more advice to give you than I.
I think that in the media sectors, the more we are present, the more the effect snowballs. Céline Dion is the biggest record seller in the world today, she is present, I would not say unendurably so, but we get to see her a lot.
She is always reminding her audience that she is there. This is a good opportunity for Canada. As she is not denying her Canadian roots, she talks about the whole thing positively, thanks to her, your flag is already up the flagpole. There are no means too small or profits too little in this communication's logic. Good artists can already be a formidable asset in terms of presence.
The presence can be economic if you earn a lot of money, but it is also a sentimental or symbolic presence. In the cinema, you have Atom Egoyan who shows up with a movie at Cannes every two years and that then is distributed in the movie theatres. That production comes from here. You immediately have to remember that Canada exists and that somebody is making movies there. That is not a trivial thing. On the other hand, they are symbolic aspects. I am not at all sure that those movies are making scads of money. How do you tie that in with an economic result? I am putting on my exporter's hat.
I am thinking along the same lines as you. In Europe, I goad the commission into thinking about export mechanisms for our audiovisual catalogues. I have only proposed the idea. I asked that the commission get export specialists on board to look at the matter of export guarantee techniques, physical presence, people setting up in countries that could tell us what kind of demands there is for the European programs. I am not a specialist in those matters. I cannot give you much more on that.
The Chairman: We thank you for your availability and your open-mindness.
Mr. Thiec: I wish you well in your work. I would like to get a copy of it when you are done. I find this exercise stimulating because it is something I have to do. I told you we are preparing the GATT audiovisual negotiations. All those matters have a bearing on everything we have discussed. The commission will be holding a hearing next week. So the exchange we have had here will serve to enrich my future work.
The Chairman: We will invite you to Canada when there is less snow.
The meeting stands adjourned.